Karachi, February 19, 2026 – Pakistan Petroleum Limited (PPL) has disclosed that it is contesting tax demand notices worth billions of rupees issued by the Federal Board of Revenue (FBR), according to the company’s financial statements for the half year ended December 31, 2025.
In its filing, PPL stated that there were no major changes in the status of contingencies and commitments as previously disclosed in the annual consolidated financial statements for the year ended June 30, 2025, except for several new tax-related developments.
During the reporting period, the company received multiple orders from tax authorities, raising a sales tax demand of Rs517 million for different tax periods under the provisions of the Sales Tax Act, 1990. PPL said it is aggrieved by these assessments and is in the process of filing appeals before the Commissioner Inland Revenue, Appeals (CIRA).
Additionally, amendments to income tax assessments for tax years 2020, 2021, 2022, 2024, and 2025 resulted in an aggregate tax demand of Rs6,058 million. The primary reasons cited include issues related to tax rates, provisions for windfall, and disallowance of depletion allowance linked to gathering and processing charges. The company paid these amounts under protest and has initiated the appeals process before the CIRA.
Furthermore, PPL disclosed that its tax return for the year 2023 was selected for income tax audit, leading to an additional tax demand of Rs1,006 million, mainly due to the disallowance of depletion allowance on gathering and processing charges. This amount was also paid under protest, and the company has filed an appeal.
Subsequent to the reporting period, the Federal Constitutional Court of Pakistan ruled on constitutional petitions related to super tax, stating that certain provisions of the Income Tax Ordinance, 2001, would apply to exploration and production companies only if they do not exceed tax rates stipulated in the Fifth Schedule and respective Petroleum Concession Agreements. PPL said it is reviewing the ruling and, based on its initial assessment, does not expect any adverse financial impact.
The company reaffirmed its commitment to pursuing legal remedies and protecting shareholder interests.